Criticism of Bath building sale prompts new city policy

BATH — After being criticized for the way a city-owned building was sold this spring, the City Council on Aug. 7 will review a new policy governing the sale of city property.

Several residents have spoken out against the way the Mid Coast Center for Higher Education was sold, questioning the transparency of the process and the value of the sale.

The council on April 17 unanimously approved the sale of the Park Street building to Robert Smith of Phippsburg for nearly $800,000; its assessed value is $6.5 million, according to the city’s online database. The vote drew no public comment that night.

More recently, Larry Scott of Washington Street and Michael Wischkaemper of York Street have criticized the lack of a response from most councilors to questions they later submitted about the sale.

“I think that my real concern is that we’ve gone this long without an answer,” Scott said Wednesday at a council workshop.

“If we knew what happened, perhaps there would not be questions of scandal, perhaps there would not be discussions of wrongdoing,” Wischkaemper said. “… I don’t think that Mr. Scott or I have ever said that the building shouldn’t have been sold. We think it probably should have been sold. We simply agree that due diligence wasn’t done to set a price, and to sell it in an appropriate way.”

Robert Westlake of Washington Street agreed. “Due diligence was not applied in the sale of this property,” he said. “Had it been, we wouldn’t be here tonight.”

Councilor David Sinclair responded that he believes the council’s actions in selling the building were correct. He noted that he chose to answer the questions put to him “not because I felt that I had to … but because I felt it was right for me to do that. I think that’s a determination that each councilor has to make for him or herself.”

He said he did not understand the council as a whole not answering the questions, “but if that’s the will of the body, so be it.”

Resident Ed Rogers noted that “when the hospital tried to sell that building, they couldn’t sell it; nobody wanted it. They gave it to (the city) for a dollar.

“… I think you guys did a really good job in getting what you got out of that place,” he told the council. “… It’s just a shame to hear the criticism of what happened there. Maybe you have to have some new policies to let more people know. But … I know myself – I own a lot of real estate in town – I could have easily gotten involved in buying the hospital if I thought there was a way it would work. But I, and my partner, never thought we could figure out how to make money out of that building.”

Council Chairman Bernard Wyman defended the sale. “Before, this property was a liability on the backs of the taxpayer,” he said. “And now it’s an asset to them.”

The property was listed with a real estate agent, and the city got a full-value offer from Smith six days later, City Manager Bill Giroux has said. Part of the offer was that the property would not be advertised until the City Council had an opportunity, soon afterward, to consider the matter, the manager said.

Paul Mateosian, Bath’s assessor and assistant city manager, has said the value of tax-exempt properties is irrelevant. He said the value listed in the database for the early 20th century property is a “cost-approach number,” based on what it would cost to build a hospital that size, minus depreciation, and is not intended to reflect its market value.

The former hospital has been re-utilized as a rental property, and its expenses have exceeded income during much of the time the city has owned it, Mateosian pointed out. He explained that a property like the Mid Coast Center, with an unstable tenant situation, would be capitalized at a higher rate than a parcel with a stronger income stream, causing the value to be reduced.

The city’s Economic Development Committee is drafting the city property sale policy for discussion at the council’s Aug. 7 meeting.

“Although we followed the ordinance, we could have definitely been more public about it and done better,” Giroux said following Wednesday’s meeting. “We want to do that in the future. We think this new policy will guide us … to avoid these kind of questions in the future.”

“The new policy looks very good on paper,” Scott said after the meeting, but noted that “the fact that we come up with a better system is only going to do you good if somebody actually stops and says, ‘hey, let’s follow the new system.'”

Later in the meeting the City Council discussed a $235,000 shortfall in revenue sharing from the state, a product of the recently passed state budget. Thanks to an increase in state subsidy to Regional School Unit 1, the city is receiving an extra $226,000 that will offset that shortfall. The remaining $9,000 will be covered by delaying the filling of two city vacancies.